Two leading oil and gas companies from China and Kazakstan Monday inked an agreement on a major crude oil pipeline that may help boost Kazakh oil exports to China.

China National Petroleum Corp (CNPC) and Kazakstan's State-owned KazMunaiGaz will jointly invest in the construction of a 1,240-kilometre-long pipeline from Atasu in northwestern Kazakstan to the border of China's Xinjiang Uygur Autonomous Region.

Construction on the project, which is the second section of a 3,000-kilometre trans-border trunkline, is expected to begin in August, said a CNPC news release. The pipeline's initial capacity is expected to hit 10 million tons of crude oil a year after its completion in 2005.

When completed, the three-section trunkline, with a total length of more than 3,000 kilometers, would be able to deliver up to 20 million tons of Caspian Sea crude to western China annually, experts said.

"Focusing on the construction of Sino-Kazakh oil pipeline, the two nations should seek new breakthroughs in their co-operation of energy sources," President Hu Jintao told visiting President of Kazakstan Nursultan Nazarbayev Monday.

With similar geopolitical situations and mutually complementary resources, China and Kazakstan are in a good position to work together, Hu said.

Both governments are pushing for a more relaxed and convenient environment to enlarge bilateral trade, he said.

Moreover, both sides should move towards easier transport through more integrated port freights and communication networks.
More Kazakh companies are welcome to take part in China's western development movement which can grow together with Kazakstan, Hu said.

For his part, Nazarbayev said China's development poses no threat to Kazakstan, but will, in fact, strengthen the relationship between the two countries particularly in relation to trade, energy and communications.

After their talks, the two leaders appeared at a signing ceremony for a joint communique, which is the main agreement for the oil pipeline, and six other documents.

The agreement says Kazakstan sticks by the one-China policy and opposes the independence of Taiwan as well its attempts to join any international and regional organizations that require national sovereignty.

The two nations agree that terrorism, separatism and extremism severely threaten world safety and vow to strengthen bilateral and multilateral co-operation to fight against these forces.

Both nations will combat all forms of terrorism, including the Eastern Turkistan groups, said the communique.

Hailing the trans-border oil pipeline as a project of great strategic importance to Kazakstan, Kazakstan's Prime Minister Daniyal Akhmetov said his government would seek the leading role of the project by acquiring a 51 per cent stake, Xinhua reported.

He made the remarks at an economic forum in April in Kazakstan.

The first section of the project, running 448.8 kilometres from Atyrau to Kenkiyak in Kazakstan, was completed at the end of 2002 and came into operation in March, said the CNPC on its website.

(China Daily May 18, 2004)